What is AVS?

AVS stands for Address Verification System, an added level of credit card security provided by credit card issuers to detect suspicious credit card usage. Simply put, it’s a way for business owners to check if the person presenting a credit card as payment for your merchandise or services is actually the authorized cardholder.

This security check works to protect the cardholder as well as the merchant. As a consumer, you’ve been exposed to the Address Verification System for years. Think back to the last time you gassed up your car. You swiped your credit card and the system asked you for your zip code. If you pressed the right buttons and input the information correctly, the next screen you saw said “Authorizing”. But if you pressed just one wrong number on the keypad, the transaction abruptly ended. Granted, it can be time consuming to start the payment process all over again because of a mistyped number. But the protection benefits to the cardholder and the business owner certainly outweigh the annoyance factor.

With this system, a thief attempting to use a stolen credit card will need to have more information than just the credit card number and expiration date to use the card. Of course, no protocol is fool proof and that goes for the AVS. If a thief has access to a stolen credit card or credit card number, it’s certainly possible he has access to the card owner’s address as well. But this extra security filter has proven to be successful in identifying several different types of credit card fraud.

How AVS Works

At checkout, your customer is asked to provide the numeric portion of their billing address, in the form of their street address and zip code. This information may be keyed in, or in the case of an on-line purchase, it is taken from the billing information. During the purchase authorization process, this information is relayed to the issuing bank. If the information the cardholder provides matches the information on file at the issuing bank, the transaction continues. Note this does not mean the transaction is approved. Remember, the Address Verification System only verifies whether the person using the credit card to make a purchase has the authority to do so. There are other factors, i.e. the transaction puts the card over its limit that could trigger a “decline”.

But if the numbers don’t match, the issuing bank stops the process and relays an AVS response code and message to your credit card processing company. These response codes specifically detail how well the data that was submitted actually matched the information on file.

Here is a list of some of the AVS response codes that could trigger a decline:

• A : The street address matches, but the 5-digit zip code does not.
• B : Address information was not submitted in the transaction information, so AVS check could not be performed
• E : The AVS data provided is invalid, or AVS is not allowed for the card type submitted
• G : The credit card issuing bank is of non-US origin and does not support AVS
• N : Neither the street address nor the 5-digit zip code matches the address and zip code on file for the card
• U : Address information is not available for the customer’s credit card
• W : The 9-digit zip code matches, but the street address does not match
• Z: The first 5 digits of the zip code matches, but the street address does not match

A full list of AVS Response codes by credit card issuing brands is available (at the end of this article or in another section of the site). There is also a list of response codes specific to international payment transactions.

Understanding and Using the AVS Results

The results of an AVS check is based on how well the numeric data presented matched the information on file. If the address doesn’t match at all, the transaction will certainly be declined. And there are other responses, such as response code B: Address information was not submitted in the transaction information, so AVS check could not be performed that will also trigger an immediate decline by the issuing bank. These response codes are sent to your credit card processing company and indicate that the risk of fraudulent use is too high to continue the transaction with any degree of safety.

But as you read through the AVS response codes, you’ll see that these codes describe levels of accurate matches. Maybe the street address matches, but the zip code is off by one number. This discrepancy can often be explained. Sometimes it’s a simple matter of a slip of the finger during data input. Or maybe the cardholder’s zip code changed during a rezoning. There could be any number of legitimate reasons as to why the information provided isn’t an exact match to the information on the original credit card application. Should all mismatches be immediately denied? Not necessarily.

Once the response code is returned to you credit card processing company, these codes are processed through a filter you set up. For example, response code N: Neither the street address nor the 5-digit zip code matches the address and zip code on file for the card is a pretty good indication that the person presenting the card for payment is probably not the owner of the card and you should deny the transaction. But response code A: The street address matches, but the 5-digit zip code does not could have several valid reasons for the mismatch, especially if it is only one digit off. AVS filtering is done on each transaction that goes through your credit card processing company. This filter allows you to define the level of risk you are willing to take with credit card transactions.

Credit card fraud is theft and the cost to business owners, both small and large, can be substantial. Not only do you lose your merchandise, you lose your profit from the sale, and you’re also responsible for chargeback and other fees leveled by the credit card companies. And merchants who choose to accept credit cards without using an AVS check are also subject to higher merchant processing fees. So although you can’t prevent credit card fraud from ever happening to you, you can minimize the cost and headaches by taking advantage of this tool available to you.